The Lease Negotiation Checklist

Leasing office space is a big decision. And if you make a mistake, it can cost you dearly.

That’s why it’s so important to create a checklist of factors to consider when leasing an office.

It’s impossible to list all that you should know before signing those leasing documents. But here are some of the most important issues to consider:

The basics

There are certain lease terms that you simply must know. Some are obvious: You should know how much your monthly rent is and the length of your lease.

But there are some basics that are easy to overlook.

For instance, are there escalation clauses for the office space? This is important to know, and can impact your budget. These clauses, as their name suggests, allow landlords to raise your rent by a specific amount after a given period of time. This allows landlords to absorb any increase in costs charged by their cleaning staff, trash-removal services, landscapers or any other professionals that help maintain an office building.

As an example, an escalation clause might allow a landlord to raise rent by 2 percent each year to cover increased costs. You need to understand this before signing a long-term lease.

You should know, too, if your landlord is forbidden from boosting your yearly rent by more than a certain percentage. Your lease might state that your landlord can only raise your yearly rent by a maximum of 5 percent a year. Again, this is an important factor to consider. Such caps can provide you some financial protection should you choose to sign a long-term office lease.

Maintenance

Your office building might include a lobby with a soaring atrium and a water fountain. It’s a nice feature. But make sure that you know exactly how this lobby will be maintained.

Are you required to pay a separate fee for common-area maintenance? And if so, how large is that fee? This could impact whether a particular office space fits in your budget.

Improvements

Maybe an office sits in the perfect neighborhood for your business. But before you move in, the office space needs some work. Maybe the office needs new carpeting. Perhaps the lighting is too dim for your workers. Maybe you’d like an open floor plan free of the dozens of cubicles now filling the office space.

In your office-lease checklist, make sure to note the improvements you’ll need before moving into your office space. Negotiate so that the building owner makes these improvements before you move in.

Make sure to note, too, how long any improvements might take. You need to make sure that your new office space will be ready for your planned move.

Future repairs

The odds are good that something will break in your office in the future. Make sure to determine exactly who is responsible for repairing or covering the cost of repairs to the equipment in your office.

You can generally assume that you’ll be responsible for repairs to equipment that you bring into the office, everything from computers and fax machines to the ergonomic chairs that you’ve special-ordered. Your landlord will usually be responsible for repairing light fixtures, flooring, doors and common-area features.

Make sure, though, that your checklist includes a reminder box to ask your landlord about future repairs. Repair work can be pricey, and depending upon who is responsible for which repairs, can turn your affordable office space into a financial burden.

This is just a partial list of the checklist items that you need to consider before leasing office space. Remember, the more thorough you are before signing your paperwork, the smoother will be your transition to new office space.